9th Mar 2020 11:38
(Alliance News) - FirstGroup PLC responded on Monday to majority shareholder Coast Capital Management LP's calls for an extraordinary general meeting to demerge the transport company's North America businesses.
Coast Capital holds a 10% stake in FirstGroup. The investment firm said it wants First Student and First Transit separated from the UK business, to create "immediate" value for shareholders.
FirstGroup replied, saying it agreed there is "material value" to be unlocked within the company, and is intent on delivering this for shareholders.
Coast Capital noted FirstGroup has yet to update investors about its strategic review, which could involve selling its US units.
In December, FirstGroup had said it was conducting a strategic review of its North American businesses First Student and First Transit and would "formally explore all options" including a potential sale.
FirstGroup operates the iconic Greyhound bus service in the US.
The Aberdeen, Scotland-based public transport operator added that it is separately undertaking an improvement programme to address the performance of UK business First Bus.
"Our scheduled trading statement will be published on Wednesday March 11, in which we will update the market on trading since our half-year results in November in addition to the progress of our strategic plans, including in relation to our North American contract businesses," the transport firm said Monday.
Earlier Monday, Coast Capital said: "Unless the board announces a separation, Coast Capital intends to requisition an EGM in order to provide investors with the opportunity to vote on an immediate de-merger of the North American operations. Coast Capital believes that in the absence of a full divestment notably above book value, the company must pursue a listing of these businesses on a North American exchange and the LSE. This will allow UK investors to realize value from their investment in the company, and enable new North American investors, public or private, to buy into the North American operations."
Coast Capital is adamant that Student Transport and Transit are worth "notably" more than book value, and believes the unit would benefit from a New York or Toronto listing.
"A dual listing structure allows existing UK investors to retain shares of an LSE listed company, while also providing North American investors access to the largest pureplay North American student and transit operations," Coast Capital said.
Adding: "We believe there will be significant demand from US/Canadian investors for the shares of the leading provider of North American student transportation and transit operations -in light of the long term contracts (upwards of four years), high rates of contract renewals, and attractive margins and return on capital."
Shares in FirstGroup were down 5.2% in London on Monday morning at 95.25 pence each.
By Paul McGowan; [email protected]
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